Indian Economy Estimated 7.3% Growth In 2021: UN
India’s economy is projected to grow at 7.3 per cent in 2021, even as it is estimated to contract by 9.6 per cent in 2020 as lockdowns and other efforts to control the COVID-19 pandemic slashed domestic consumption, the UN has said.
The global economy shrank by 4.3 per cent last year, over two-and-a-half times more than during the global financial crisis of 2009. The modest recovery of 4.7 per cent expected in 2021 would barely offset the losses of 2020.
India’’s economic growth is forecasted to be 7.3 per cent in 2021, the fastest growing major economy with only China coming in a close second with a 7.2 per cent projected growth rate in calendar year 2021.
The report said economic growth in South Asia in 2021 will be insufficient, at 6.9 per cent, to make up for the losses of 2020, as pandemic hotspots re-emerge and, increasingly, the ability of governments to deal with the multitude of challenges becomes exhausted.
The pandemic and the global economic crisis have consequently left deep marks on South Asia, turning this former growth champion into the worst performing region in 2020. While trade, remittances and investment are expected to pick up in 2021, as much of the global economy moves towards recovery from the widespread lockdown, investment and domestic consumption in many South Asian countries will nevertheless remain subdued owing to the continuing threat of the pandemic and the scarring effects of the crisis..
Regional economic growth for 2022 is forecast at 5.3 per cent, which would allow South Asia to finally exceed its 2019 economic output, albeit only marginally.
On the other hand, South Asian countries that are relatively more exposed to global economic conditions, such as Bangladesh and Maldives with their high share of foreign trade and Nepal with its dependence on tourism and remittances, will enjoy a stronger rebound, of about 10 per cent growth in 2021.
Policymakers in South Asia will need to strengthen their efforts to formalize labour markets and strengthen social protection systems to dampen the impact of the crisis on the most vulnerable and improve macroeconomic resilience, the report said.
Informal workers, accounting for over 80 per cent of workers in Bangladesh, India and Pakistan have indeed been far more exposed to loss of employment than formal workers during the crisis and South Asia’s widespread informality has almost certainly magnified the impact of the pandemic, it noted.
The report said the COVID-19 fiscal response in South Asia has consisted of a vast ad hoc expansion of social assistance and direct cash transfers for the neediest, but this kind of special support is neither sufficient nor sustainable. The report noted that the pandemic exposed how stark inequality affected the ability of people to cope with the economic impact of the crisis.
The report said share of services in total value added has risen steadily, from 60 per cent of GDP in 2000 to 65 per cent in 2017. The importance of the services sector has risen sharply in other large developing economies, such as Brazil and India, it said.
Among the developing economies, services trade is, however, highly concentrated. Just five economies (China, Hong Kong, India, South Korea and Singapore) accounted for more than 50 per cent of services exports from developing countries in 2017. While India stands out in terms of building competitive services exports, there are also other cases that are worth highlighting like Mauritius and Senegal, the report said.